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Brunei: 2012 Year in Review

The Oxford Business Group published the following Economic Update on Brunei Darussalam:

Brunei Darussalam: Year in Review 2012

Asia | 10 Jan 2013

While overall growth in Brunei Darussalam’s economy slowed in 2012, expansion in the non-oil and gas sector suggested that some of the Sultanate’s diversification efforts are gaining traction and should pave the way for government plans to target value-added production.

The Department of Economic Planning and Development (JPKE) announced in December that GDP growth contracted to 1.6% in 2012, down from 2.2% the previous year. Slower growth, the JPKE said, was due to a drop in oil and gas output, together with a fall in liquefied natural gas (LNG) production.

In October, the Asian Development Bank and the IMF both revised their growth projections for the Sultanate down to 1.5% and 2.7%, respectively, based on lower output of resources.

However, non-oil and gas sector growth rose by 4% in 2012, the JPKE said, driven mainly by expansion in government services, the wholesale and retail trade, business services and water transport.

In March, the Legislative Council approved a $5.2bn budget prioritising improved human resources and government services, in line with the country’s aim of further diversifying its economy. The budget allocated $874m to the Ministry of Finance, while channelling $731m to the Ministry of Education, $593m to the Prime Minister's Office and $347m to the Ministry of Health.

As part of its efforts to encourage growth in the non-oil sector, Brunei Darussalam began rolling out key education and business development initiatives aimed at driving growth in creative industries. Targeted segments include software development firms and related small and medium-sized enterprises (SMEs).

The drive to encourage innovation has also generated projects such as the Brunei Agro-Technology Park, which, when completed in 2015, is expected to act as a “one-stop shop” for investment in fields such as halal food production.

However, while the government is pushing ahead with its diversification plans, some critics are calling for equal efforts to be given to nurturing growth in value-added production and downstream processing across the sectors, including energy and manufacturing.

The government will be looking to a planned $2.5bn oil refinery and aromatics cracker at Pulau Muara Besar to generate a broader role for the sector in economic expansion. The refinery, which will be constructed by Chinese firm Zhejiang Hengyi Group, will have a production capacity of approximately 135,000 barrels per day (bpd). Six downstream petrochemicals plants, with an aggregate investment of $2.8bn, are also set to be built at the Sungai Liang Industrial Park.

Alongside its refinery development, Brunei Darussalam also witnessed significant infrastructure improvements in 2012, including a major expansion under way at Brunei International Airport which is expected to be complete by November 2014, and a planned upgrade of Pulau Muara Besar port.

In addition, the government allocated BN$1.5bn ($1.23bn) for housing projects, including the Landless Indigenous Citizens Housing Scheme and the National Housing Scheme, which will provide 17,500 low-cost homes by 2014.

With food security a major issue, the Sultanate moved closer in 2012 to achieving its target of 60% food self sufficiency by 2015 by introducing high-tech farming initiatives and entering into agribusiness deals with neighbours, including Malaysia’s Sarawak and Sabah.

Figures released by the Department of Agriculture and Agrifood in November revealed that gross production for agriculture and agrifood grew to a value of $240.96m in 2011, up from $228.43m in 2010.

While domestic demand was up in 2012, the Sultanate’s inflation and consumer costs were kept in check, with the JPKE noting a year-on-year (y-o-y) increase in personal consumption expenditure of 4% in the second quarter and a 25.6% rise in imports of goods and services. The Asian Development Bank said in its Asian Development Outlook, published in October, that the country’s price controls and subsidies should keep inflation in the 1-2% range.

Buoyed by the Sultanate’s four-place rise to 79 in the World Bank’s Doing Business 2013 survey, which was attributed to significant improvements in the approval process for construction permits, the government stepped up efforts in 2012 to increase the country’s appeal to foreign investors.

Efforts were led by the Brunei Economic Development Board (BEDB), which identified several industry clusters with significant potential in the export-oriented manufacturing and services sectors.

In a further investment boost, the county ranked 22nd out of 185 economies for ease in paying taxes, according to the “Paying Taxes 2013” report released in December by PricewaterhouseCoopers and the International Finance Corporation. Brunei Darussalam also performed well in “time taken for compliance”, registering 96 hours, which was less than half the regional and global averages of 231 and 267 hours, respectively.

While the Sultanate’s drop in oil and gas output this year is expected to be reversed in 2013, it served to highlight the need for the country to intensify its diversification and innovation efforts. A more broad-based economy is expected to further strengthen the country’s role as a regional player, shoring up its other attractions, which include legal and political stability.

DESPITE first making its appearance in the Sultanate during the 1940s, Kuih Mor continues to be a household favourite today as a tea time snack or festive treat particularly during Hari Raya Aidil Fitri.

Siti Norhafizah Hj Bagol, a final year student at Universiti Brunei Darussalam who researched on Kuih Mor as part of her Brunei Traditional Industry module, said the three-ingredient sweet treat may have existed in Brunei as early as the 1940s when padi was known to have been grown to make different food items.

Over time, the cookie has also become a popular door-gift choice often handed out at Malay weddings or gatherings, said Siti Norhafizah.

Made with flour, oil and granulated sugar which have been ground into a powder, the bite-sized biscuits have a crumbly texture and are coated with powdered sugar.

The age-old technique of making Kuih Mor by hand has however changed over the course of time, with many now opt…

BY COMMAND of His Majesty Sultan Haji Hassanal Bolkiah Mu’izzaddin Waddaulah ibni Al-Marhum Sultan Haji Omar ‘Ali Saifuddien Sa’adul Khairi Waddien, Sultan and Yang Di-Pertuan of Brunei Darussalam, the Prime Minister’s Office hereby announces that His Majesty has consented to the transfer and appointment of the following senior officers – Dato Paduka Haji Mohd Juanda bin Haji Abdul Rashid, Permanent Secretary (Law and Welfare) at the Prime Minister’s Office as well as the Director of Anti-Corruption Bureau and Solicitor General has been transferred to the Ministry of Culture, Youth and Sports as the Permanent Secretary at the Ministry of Culture, Youth and Sports; and Datin Elinda binti Haji CA Mohamed, Special Senior Duties Officer, Ministry of Home Affairs has been appointed as Permanent Secretary at the Prime Minister’s Office and Director of Anti-Corruption Bureau.